Towards a Just and Equitable Clean Future: Benefits of Clean Energy Tax Incentives
Last Updated May 9, 2022
Executive Summary
As consumers struggle to keep up with record energy prices following Russia’s invasion of Ukraine, it is essential that President Biden and Congress slow inflation and meaningfully address the climate crisis. To achieve this goal, the US must significantly increase investment in renewable energy and American manufacturing of clean energy technology. While gas prices are a major driver of inflation — accounting for almost one-third of price increases since the pandemic began — clean energy sources such as wind and solar actually have a deflationary effect on the economy.
Passage of the $555 billion package of clean energy tax incentives and related climate provisions under debate in Congress is one of the most effective steps that President Biden and Congress can take to invest in renewable energy and energy independence. If passed, this package of tax incentives would constitute the largest-ever U.S. investment in climate action, including $325 billion in clean energy tax incentives to supercharge the installation of renewable energy and increase its accessibility for low- and middle-income households. For example, a new investment tax credit for the build-out of regionally significant, high-voltage transmission lines is projected to add 30,000 megawatts of renewable energy capacity to the grid, providing $2.3 billion in energy cost savings for the bottom 80% of income brackets.
The cost-savings associated with these tax incentives are significant. Together, they are predicted to lower the average family’s energy bill by $500 per year. Furthermore, these tax incentives would cut US greenhouse gas emissions by more than one gigaton and help achieve President Biden’s climate goals of 80% clean electricity by 2030, while delivering at least 40% of the investments to disadvantaged communities. Compared with a simple five-year extension of the existing tax code, the expansion and 10-year extension of these clean energy tax incentives are projected to result in 10-30 times greater emissions reductions.
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